Newsroom

November 20, 2014

McWatters pushes back on budget growth, disclosure

NCUA Board Member Mark McWatters pushed back during Thursday's open board meeting on the agency's growing budget, transparency in how the agency spends the funds it receives from credit unions and the impact of public budget hearings.

NCUA Chairman Debbie Matz, at the start of the board's discourse on the $279.5 million budget for 2015, noted the numerous requests NCUA has received seeking decreases in the agency's budget. She recalled years of budget cuts that she believed hindered the agency's supervision and said "cutting the budget is not an option."

McWatters, however, said he was "dismayed" by the 4.2 percent increase slated for 2015 as well as the ongoing rise in the overhead transfer rate and aspects of the budget process itself. He voted no on the increased budget, operating fee scale and OTR.

NAFCU has long urged NCUA to rein in budget growth and reduce spending where efficiencies can be found. The budget information released this year is more detailed than in the past. However, NAFCU is encouraging the agency to disclose more about how budget dollars – which credit unions, not federal tax dollars, fund – are allocated.

The 2015 budget includes a net increase in full-time equivalent positions of 4.2, for a total of 1,268.7. Of the total budget, 72 percent is to cover employee pay and benefits, another 11 percent is for travel and 15 percent is for administrative activities and contracted services. Administrative and contracted services are growing faster than any other costs – by 6.1 percent and 8.5 percent, respectively.

McWatters said the board "should remain mindful that we are spending other peoples' money." He said any allocation of the funds provided by credit unions – which provide the lion's share of NCUA's budget funding – should follow only after thoughtful review of the need and whether costs are undertaken "in the most efficient, effective, transparent and fully accountable manner."

McWatters then ticked off a list of 11 things the board should do to increase transparency in the budget process and NCUA operations. These items include, among other things:

  • more detail on pay and benefits, travel, rent/communications/utilities, administrative, and contracted services;
  • detailed analysis of how NCUA can reduce the above expenditures;
  • submission of the methodology used in calculating the OTR for public comment (staff said this used to be on the agency's website; efforts are under way to make that accessible again);
  • detailed analysis of expenditures by NCUA, the NCUSIF, the Temporary Corporate Credit Union Stabilization Fund and the Central Liquidity Facility;
  • detailed analysis of why NCUA's budget has risen more than 50 percent over five years.

McWatters also invited "interested parties" to let him know their thoughts about the budget and budget process, including the agenda and mechanics of a public hearing on the budget, transparency and methodology.

NCUA noted Thursday that the 2015 budget increased is the smallest in seven years. See McWatters' full statement and list here.